Kate Prescott

Measures of international competitiveness: A critical survey∗ †

An examination of the extant literature on competitiveness reveals a wide variety of notions and extreme difficulties of measurement and application. Single measures of competitiveness do not capture all the elements of the concept. Useful measures have to specify the level of analysis (national, industry, firm or product) and encompass competitive performance, its sustainability through the generation of competitive potential and the management of the competitive process. The interrelationship between these three key elements are also important in a dynamic context. The effectiveness of management is essential to this analysis and the concept of industrial effectiveness at the management level enables a link to be established between the concept of competitiveness and an empirical investigation of decision making. A framework is derived which is of general use and specific measures are proposed to fill the “empty boxes” suggested.

Measures of International Competitiveness: Empirical Findings from British Manufacturing Companies

This paper presents the measures of competitiveness used by British managers. The evidence comes from interviews with managers in five manufacturing industries. Measures are classified as (1) performance measures, (2) measures of competitive potential and (3) management process determinants of competitiveness. In the first category, profitable market share emerged as the key concept. The most important measures of potential were R&D spending and commercialisation of R&D. Finally, process measures were given considerable weight by managers and management focus, internal and external relationships and internal functional integration and communication were particularly emphasised.

Foreign Market Servicing by Multinationals: An Integrated Treatment

In conventional international business literature, the marketing and transport functions are either ignored or assumed to be governed by the same factors that determine production. An attempt is made to introduce the integration that is long overdue. The factors which determine the decisions of location and internalisation are examined, and analysis is made of the important role played by information flows in the planning of an integrated channel system. The conclusion is that simplistic categorisations are too crude, and that an integrated treatment, recognising the interdependencies and cost implications of each function, is essential for a complete conceptualisation of the foreign market servicing decision.

Canada-UK bilateral trade and investment relations

Preface and Acknowledgements - Introduction - PART 1 CANADA AND THE UK IN THE WORLD ECONOMY - Canada and the UK in World Trade: An Overview - Canada, the UK and Foreign Direct Investment: An Overview - Foreign Trade: Theory, Policy and Institutions - Foreign Direct Investment: Theory, Policy and Institutions - UK Canadian Trade and Direct Investment - PART 2 EMPIRICAL STUDY OF CANADIAN AND UK FIRMS - Background to the Survey - Foreign Market Servicing Strategies - Economic Integration - Competitiveness - Conclusion - Bibliography - Index

Global Integration: Changing Bilateral Trade and Investment Relations between Canada and the UK

Over the last couple of decades, dramatic changes have been witnessed in the international business environment. Internationalisation of business has continued apace, driven partly by stagnant domestic markets and partly by the need to expand abroad to spread risks and compete on a par with leading multinational players. As a result, the international business arena is no longer dominated by large multinationals emanating from the world’s leading developed markets; the newly industrialising countries (NICs) have spawned a number of global players, and small firms have begun to take on a more significant role in international business activity. Typically nationally constrained industries, those comprising ‘the service sector’ in particular, have as a result of liberalisation and deregulation opened up to international competition, further fuelling changes in international competitive activity, and adding to competitive intensity.

Foreign Market Servicing Strategies

The nature of world competition is changing: the growing dominance of the global triad (The Americas, Europe and Asia Pacific) is refocusing corporate planning, in many cases, into a three-pronged strategy designed to achieve a global balance between the major markets of the world; the number of multinational companies is increasing as large company groupings are established either through organic growth, mergers and acquisitions or international alliances; small firms, unable ‘to be all things to all people’ are rationalising their businesses and concentrating on core strengths spawning a number of international niche players; the international pool of medium-sized companies is disappearing in many sectors as these firms are ideal targets for takeover by the large firms, or are cut back to become specialist producers. All these changes have important ramifications for foreign market servicing; changes in the nature of international firms are altering the way in which they service their international markets and are giving rise to new trends in market servicing on a global scale.

The Survey: A Profile of the Firms and their Industries

The background information in the first part of this book has shown the importance of bilateral trade and investment between Canada and the UK in the context of integration into the NAFTA and the EC respectively. Part II examines the impact that recent changes have had on the strategies of UK and Canadian firms. Personal, in-depth interviews were conducted with senior executives of leading firms of both countries in late 1992 and early 1993. Interviews covered 15 UK and 10 Canadian firms. These interviews took place with senior managers, usually at Director level, responsible for the international strategy of the companies.

Canada, the UK and Foreign Direct Investment: An Overview

The UK has long been a major source country for outward investment in the world economy. Latterly, it has also become a more prominent host country for inward investment, particularly for those countries seeking to establish a stronger European Community presence. Over the longer term, Canada, by contrast, has projected a somewhat myopic view of the merits of reciprocal foreign direct investment, and has only recently instituted a more pro-active policy towards such investment.

Foreign Trade: Theory, Policies and Institutions

Superficially, both Canada and the UK are confronted with a dilemma in trade policy between what has been referred to as ‘diversification versus continentalism’, that is, should they seek to diversify their import sources and export destinations or tie themselves in more closely with fewer, more geographically — proximate trade partners? The logic of ‘comparative advantage’ suggests extensive multilateral trade relationships are preferable to narrowly proscribed ones as typified by regional trade blocs which often reflect parochial thinking and the promotion of sectional interests by discriminating against trade with non-member countries. The fact, however, that both Canada and the UK are members of regional trade blocs — the Canadian—USA Free Trade Agreement and the European Community/Union, respectively — must be looked at alongside the broader attempt, under the auspices of the General Agreement on Tariffs and Trade (GATT), to establish world-wide free trade. The lower the level of world tariff rates and the fewer non-tariff restrictions on trade the less likely it is that the creation of trade blocs per se will produce serious trade-reducing and trade-diversionary effects. Since Canada and the UK have both actively supported GATT trade liberalisation programmes then it could be argued that ‘diversification’—‘continentalism’ must be viewed as mutually complementary rather than as diametrically opposed trade policy doctrines. This said, however, the possibility of ‘divided’ loyalties cannot be dismissed lightly, and the ‘them’ and ‘us’ perceptions that this can create can sometimes present a serious obstacle to harmonious trade relations. For example, Papadopoulos (1986) has contended that the emergence of various trade ‘irritants’ between Canada and the European Community doomed the 1976 ‘Framework’ Agreement between them to early failure and galvanised Canadian thinking once more to the attractions of ‘Continentalism’ and a trade pact with the United States.

Foreign Direct Investment: Theory, Policies and Institutions

Foreign direct investment (FDI) is largely associated with the activities of multinational companies (MNC) as they seek to obtain inputs for the products they make and more effectively market these products to their customers.